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Saudi Arabia wants crude oil prices to rise to around $60 a barrel this year. five sources from OPEC countries and the oil industry said.
This is the level the OPEC heavyweight and its Persian Gulf Arab allies – the UAE. Kuwait and Qatar – believe would encourage investment in new fields but not lead to a jump in US shale output. the sources said. Reuters reported.
The Organization of the Petroleum Exporting Countries. Russia and other producers pledged last year to cut production by about 1.8 million barrels per day from Jan. 1. The first cut in eight years is intended to boost prices and get rid of a supply glut.
Crude prices have risen by more than 14% since the November pact but are still only trading around $56 a barrel despite record compliance by OPEC and non-OPEC members.
OPEC officials have repeatedly said the group does not target a specific oil price and their focus is on drawing global oil inventories and helping the market to re-balance.
But behind closed doors. Riyadh and its allies hope to see a higher level because the low price has pressured their finances and stoked fears of a future supply shortage.
However. they do not want the price to be so high that it encourages rival US shale producers. which were hard hit by the slump in oil prices. to ramp up production again. Advances in technology have made it easier for them to adapt quickly to oil price fluctuations.
They (the Saudis) want to see oil prices at $60 towards the end of this year. It`s good for (oil) investments. said a Persian Gulf oil industry source familiar with the matter.
Another source said OPEC and particularly the Saudis want higher prices not just for investment but also as Riyadh seeks to offload a stake in state-owned oil giant Saudi Aramco.
Over $1 trillion worth of oil projects have been canceled or delayed since mid-2014. A decline in investments in future oil projects triggered worries that this could lead to a supply shortage and spike in oil prices.
In general. something around $60 this year is good. $60 will not encourage that big increase in shale. said one OPEC source. adding that shale oil production is expected to grow by about 300.000 bpd this year.
